Taking stock of the decade.

Byline: Dilawar Hussain

This decade (2010-19) has been a mixture of hope and apprehensions for stock market investors.

Early years saw smooth sailing. Twists and turns in the stock market were mostly because of political wrangling among major parties or economic ups and downs. But the performance of the stock market in the last two and a half years has put all of that in the shade.

The downward slide began in May 2017 when the expectation of a massive inflow of funds from foreign passive investors, based on the country's re-entry into the MSCI Emerging Market from Frontier Market, turned sour.

In anticipation, investors had indulged in frantic buying and the ferocious bull tossed the index to an all-time high of 53,124 points on May 25, 2017.

Investors resorted to panic selling when they saw the outflow of $81.7 million against the expected inflow of $300m on May 31. Share prices crashed and the index tanked to 37,919 points by December, reflecting a loss of 14,220 points in seven months.

The political turmoil, which began after Nawaz Sharif took oath of office on June 5, 2013, added fuel to the fire. Several major events - such as the creation of the Pakistan Stock Exchange (PSX) after the merger of three stock exchanges on Jan 11, 2016, and the sale of 40 per cent strategic shares to a Chinese consortium on Jan 21, 2017 - had little impact on the stock market as investors continued to avoid equities on political and economic uncertainties.

Equities outperformed other classes of assets over the last 10 years

Imran Khan took over as prime minister on Aug 18, 2018. That day the KSE-100 index stood at 42,447 points. Then the second meltdown of the decade started, with the index hitting the low of 33,900 points as investors fretted over the economic malaise. By early August, the economy started showing signs of recovery, thanks to the International Monetary Fund (IMF) bailout package and stabilisation measures, with foreign exchange reserves rising and the current account deficit shrinking.

The index took an unexpected turn as bulls made their way back into the market. From Aug 16 when the index had hit the pit (28,765 points), the market witnessed a spectacular rally, which took the benchmark to 40,848 points on Dec 27 - up 12,083 points or 42pc in four and a half months. Under the PTI government, the index has seen a minor positive change of 1,559 or 3.8pc so far.

Stocks over the decade

Figures gleaned from various sources show that over the...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT